Heads of Prospecting Agreement - Randgold & Exploration Co. Ltd. and De Beers Consolidated Mines Ltd.
12/07/2004
HEADS OF PROSPECTING AGREEMENT
between
(1) RANDGOLD & EXPLORATION COMPANY LIMITED
(No.1992/05642/06)
(hereinafter referred to as "THE GRANTOR")
and
(2) DE BEERS CONSOLIDATED MINES LIMITED
(No. 1888/000007/06)
(hereinafter together with its successors in title and together
specifically with the Cessionary Company or Cessionary Companies in
clause 6.2, referred to as ("THE PROSPECTOR")
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PURPOSE OF HEADS
A. The Grantor is the holder of the mineral rights ("THE MINERAL RIGHTS") on
the properties ("THE PROPERTIES") listed on annexure A.
B. The Grantor and the Prospector have agreed to conclude these legally
binding heads of prospecting agreement ("THIS Agreement") as a prelude to
conclusion of a comprehensive prospecting agreement.
NOW THEREFORE THE PARTIES AGREE:
1. WARRANTIES
The Grantor warrants that :
1.1 the Grantor is the registered holder of the mineral rights;
1.2 no rights exist which will conflict with the rights which the Grantor
confers on the Prospector in these Heads.
2. RIGHT TO PROSPECT
2.1 With effect from the date of signature of this Agreement ("THE
EFFECTIVE DATE"), the Grantor grants to the Prospector, on the terms
and conditions set out in this Agreement, the sole and exclusive right
and consent for a period of 5 (five) years:
2.1.1 to prospect for diamonds (as held in terms of the Grantor's
titles to the mineral rights) on the properties pursuant to the
mineral rights; and
2.1.2 to remove and dispose (subject to compliance with the Diamonds
Act, 1967) of diamonds found during prospecting, all for the
Prospector's own benefit and account, subject to the provisions
of clause 9.
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2.2 In order to give effect to this, the Grantor will sign one or more
separate consents to prospect substantially in the form of annexure B
hereto.
2.3 The Prospector will be entitled from time to time:
2.3.1 during the currency of the Minerals Act 50 of 1991 ("MA"), to
obtain and renew the necessary prospecting permits, temporary
prospecting permits, permissions to remove and dispose of
diamonds found during prospecting, approvals to environmental
management programmes relating to prospecting, and temporary
authorisations to commence prospecting operations pending
approval of environmental management programmes;
2.3.2 on and after commencement of the Mineral and Petroleum Resources
Development Act 28 of 2002 ("MDA"), to:
o further any pending applications made in terms of clause
2.3.1, and/or
o lodge conversions or applications for prospecting rights and
retention permits, and
o renew or amend any such prospecting rights or retention
permits so obtained; and
2.3.3 to do whatever may be necessary (either under MA and MDA, or
otherwise) to advance or protect the Prospector's interests in
the mineral rights in terms of this Agreement and in any of the
items referred to in clause 2.3.1 and/or clause 2.3.2 that may be
granted to the Prospector from time to time.
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2.4 The Prospector shall be obliged in respect of each of the properties
in respect of which the necessary items referred to in clause 2.3 are
obtained, to perform the minimum work programme in accordance with
annexure D hereto.
3. PROSPECTING PERIOD
The prospecting period will commence on the Effective Date and will
terminate on the fifth anniversary of the Effective Date ("THE EXPIRY
DATE"), provided however that:
3.1 the Prospector will, subject to clauses 2.4 and 3.2.3, be entitled at
any time and from time to time to terminate these Heads in respect of
the whole or any part or parts of the properties by written notice to
the Grantor;
3.2 in the event that the Prospector shall at any time have obtained a
prospecting permit in terms of MA or a prospecting right and/or a
retention permit in terms of MDA (and/or any renewal or extension
thereof) (hereinafter collectively referred to as "THE PROSPECTING
RIGHTS") in respect of a particular property or properties, the
parties expressly record and agree that:
3.2.1 nothing herein contained shall be construed as obliging the
Grantor to agree to renew or extend the prospecting period beyond
the Expiry Date, the Grantor being, in its unfettered discretion,
entitled to consent or not to consent to any renewal or extension
of the prospecting period requested by the Prospector, on such
commercial terms as may be acceptable to it;
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3.2.2 unless otherwise agreed in writing between the parties, the
Grantor shall continue to be and remain entitled to all of the
rights and benefits arising under and in terms of this Agreement
relating to and/or in connection with the mineral rights,
including (but not limited to) the participation rights and
benefits contemplated in clause 7, for so long as the Prospector
shall hold and/or control and/or exercise any prospecting rights
and/or any mining right in respect of any relevant property or;
and
3.2.3 the Prospector shall be entitled at any time and from time to
time to decide not to retain such prospecting rights and/or not
to apply for a mining right in respect of the relevant property
or properties; and in such event, the Prospector shall be obliged
forthwith to deliver a written notice to the Grantor to that
effect and, in accordance with such written instructions as the
Grantor may give to the Prospector within 30 days of receipt by
the Grantor of such written notice, either:
o to abandon the prospecting rights and terminate these Heads
insofar as they relate to such property or properties; or
o to apply at its own cost for the consent of the Minister of
Minerals and Energy to cede such prospecting rights insofar
as it relates to such property or properties to the Grantor,
and should such consent be granted, thereupon proceed with
such cession at the cost of the Grantor.
3.2.4 If the Grantor fails to give any written notice to the Prospector
within the 30 day period referred to in clause 3.2.3, the
Prospector must abandon the relevant prospecting rights and
terminate these Heads insofar as they relate to such property or
properties.
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3.2.5 If the grantor fails to apply for a prospecting permit in terms
of MA or a prospecting right in terms of MDA in respect of any of
the properties by 30 December 2004 the Grantor will be entitled
by written notice to the Prospector to require the Prospector
either :
o to abandon the prospecting rights and terminate these Heads
insofar as they relate to such property or properties; or
o to apply for a prospecting permit in terms of MA or a
prospecting right in terms of MDA in respect of the property
or properties concerned or on or before 31 January 2005.
3.2.6 If the Prospector does not apply for a prospecting permit in
terms of MA or a prospecting right in terms of MDA in respect of
the properties concerned on or before 31 January 2005 following
the written notice from the Grantor in terms of clause 3.2.5
above, the Prospector will be deemed to have abandoned the
prospecting rights and terminated these Heads insofar as they
relate to such properties in respect of which the Prospector has
not made application for a prospecting permit in terms of MA or a
prospecting right in terms of MDA.
4. RECONNAISSANCE AND PROSPECTING MONEYS
4.1 Within 30 (thirty) days of the Effective Date the Prospector will pay
to the Grantor a once-off lump sum reconnaissance fee of R214 000,00
(TWO HUNDRED AND FOURTEEN THOUSAND RANDS) in exchange for allowing the
Prospector to conduct a broad-based reconnaissance programme on the
properties over the period from the Effective Date until the
Prospector acquires prospecting permits in
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respect of those properties on which the Prospector wishes to do
further exploration in order to enable the Prospector to comply with
the minimum work programme (annexure D).
4.2 Subject to clause 4.3 below the Prospector will from the date on which
the Prospector acquires a prospecting permit and approval to an
environmental management programme for prospecting in terms of MA or a
prospecting right and approval to an environmental management
programme for prospecting in terms of MDA in respect of a particular
property or properties, whichever occurs first, and thereafter for the
duration of the prospecting period (including any extension thereof
contemplated in clause 3.2 above), pay annually in advance to the
Grantor prospecting moneys, calculated with reference to the number of
hectares of the surface of the relevant property or properties in
respect of which a prospecting permit in terms of MA or prospecting
right in terms of MDA (as the case may be) has been issued and an
environmental management programme approved as follows:
4.2.1 in respect of each 12-month period from the Effective Date up to
and including the third anniversary of the Effective Date, R2,00
(TWO RAND) per hectare per annum,
4.2.2 in respect of the immediately following 12-month period expiring
on the fourth anniversary of the Effective Date, R10,00 (TEN
RAND) per hectare per annum;
4.2.3 in respect of the 12-month period expiring on the Expiry Date,
R12,00 (TWELVE RAND) per hectare per annum.
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4.3 For the avoidance of doubt it is recorded that the aforesaid
prospecting moneys will only be payable in relation to properties in
respect of which the Prospector acquires a prospecting permit and
approval to an environmental management programme for prospecting in
terms of MA or a prospecting right and approval to an environmental
management programme for prospecting in terms of MDA. Upon issuance of
a prospecting permit or prospecting right (as the case may be) and
approval of an environmental management programme as aforesaid the
prospecting moneys payable in respect of the particular property or
properties concerned will be payable, retrospectively from the
Effective Date, in respect of that portion of the prospecting period
during which the Prospector did not hold a prospecting permit or
prospecting right and approved environmental management programme as
well as for the remainder of the prospecting period until the
prospecting right or prospecting permit is abandoned or this Agreement
is terminated in respect of the property or properties concerned or
the Prospector applies for a mining right in respect of the property
or properties concerned, in which event such prospecting moneys will
cease to be payable in respect of the property or properties concerned
from date of such abandonment, termination or application.
4.4 The prospecting moneys referred to in clause 4.2 above will cease to
be payable on the first-occurring of:
o termination in terms of clause 3.1 of these Heads in relation to
the relevant property or properties, or
o the date when the Prospector applies for a mining right in
respect of the particular property or properties (provided that,
with effect from the date of first submission of such application
by the Prospector until the date on which the relevant mining
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right is granted (or finally refused or the relevant application
withdrawn, as the case may be), the Prospector shall pay to the
Grantor interest on the aggregate amount of the total prospecting
moneys payable to the Grantor in respect of the relevant property
for the 12-month period immediately prior to the date of
submission of such application, reckoned at the prime overdraft
rate (nominal annual compounded annually in arrears) charged from
time to time by First Rand Bank Limited to its corporate
customers) , or
o the date on which the Prospector delivers to the Grantor the
written notice in respect of the relevant property or properties
referred to in clause 3.2.3.
4.5 In the event of the State introducing a prospecting fee payable to the
State in terms of the MDA, the prospecting moneys will be reduced by
fifty percent (50 %) of the prospecting fee payable to the State with
effect from the date upon which that fee becomes payable.
4.6 The Prospector will pay interest (at the rate referred to in clause
4.4 above) to the Grantor on the prospecting monies payable in respect
of that period during which the Prospector held no permits under MA or
prospecting rights under MDA (as the case may be) calculated from the
Effective date to the date of issuance of the prospecting permits or
prospecting rights (as the case may be).and approval of the relevant
environmental management programme(s). For the avoidance of doubt it
is recorded that the interest payable as aforesaid will only be
payable in relation to properties in respect of which a prospecting
permit or prospecting right (as the case may be) is issued and
environmental management programme(s) approved.
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5. ANCILLARY RIGHTS
The Prospector will be entitled to exercise all rights ancillary to
prospecting which are held by the Grantor in terms of the mineral rights.
6. ACQUISITION OF MINING RIGHTS OR MINERAL RIGHTS
6.1 The Prospector will be entitled at any time and from time to time
during the prospecting period or any extension thereof to apply for,
or lodge conversion documents for the acquisition of, a mining right
in terms of MDA in respect of a particular property or properties, to
acquire such mining right, and from time to time to renew or amend
such mining right so obtained; provided however that if the Prospector
shall have given written notice ("THE MINING NOTICE") to the Grantor
of the Prospector wanting so to acquire a mining right but MDA shall
not yet have taken effect, the Grantor hereby sells and agrees to cede
the relevant mineral rights in respect of diamonds only ("the diamond
rights") to the Prospector for R1,00, on the basis that (subject to
the provisions of clauses 2, 3 and 4) benefit to and the right to
exercise such diamonds rights shall be deemed to have immediately
passed to the Grantor on receipt by the Grantor of the mining notice,
to enable the Prospector to apply for a mining authorisation in terms
of s9(1) MA, whereupon the further provisions of these Heads shall
apply as if the Prospector had so acquired a mining right in terms of
MDA.
6.2 The Prospector will be entitled at any time and from time to time
prior to the acquisition of a mining right as contemplated in clause
6.1 to cede and assign its rights and obligations in terms of these
Heads (excluding those in clauses 8 and 9 which are personal to De
Beers Consolidated Mines Limited (No. 1888/000007/06) ("DE BEERS")
and, with any
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necessary statutory consents, all its rights and obligations in terms
of any prospecting rights acquired by it in respect of the relevant
property or properties, to one or more cessionaries and assignees
nominated by the Prospector in its sole discretion ("the Cessionary
Company" or "the Cessionary Companies" i.e. the rights and obligations
in respect of particular properties may be ceded and assigned to
different Cessionary Companies), and to which cession and assignment
the Grantor hereby consents. Such Cessionary Companies will be limited
liability companies incorporated in South Africa which are formed
specifically for this purpose. Such one or more cessions and
assignments will be in substantially the form of the draft cession and
assignment reflected on annexure hereto.
6.3 In the event that -
6.3.1 the Prospector shall have applied for, or lodged conversion
documents for the acquisition of, a mining right as contemplated
in clause 6.1 in respect of a particular property or properties;
and
6.3.2 the old order diamond rights in respect of such property or
properties shall not then have ceased to exist in terms of MDA,
the Grantor hereby, save if the proviso to 6.1 has become applicable,
with effect from the date of such application or lodgement, sells and
agrees to cede the diamond rights in respect of such property or
properties to the Prospector for R1,00 (ONE RAND), on the basis
mutatis mutandis recorded in clause 6.1. The drafting, notarial
execution and registration of such cession shall be undertaken by the
Prospector's attorneys at the Prospector's cost, and to which end the
Grantor will sign all necessary documents and make available all
necessary titles.
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7. PARTICIPATION RIGHTS
7.1 If the Prospector decides to commence with mine development in respect
of the whole or any part or parts of the properties the Grantor will
be entitled to be issued with so much of the shareholding in the
relevant Cessionary Company (that is, the Cessionary Company to which
the Prospector's rights have been assigned pursuant to clause 6.2
and/or which is the holder of the relevant prospecting and/or mining
rights) as will render the Grantor the holder of 25% of the issued
share capital of the relevant Cessionary Company after such issue, and
for which issue the Grantor will subscribe at par value.
7.2 Should the Prospector still be De Beers in respect of the relevant
property or properties, i.e. De Beers has not ceded and assigned its
rights in terms of these Heads to a Cessionary Company or Cessionary
Companies as contemplated in clause 6.2, De Beers will apply for the
consent of the Minister of Minerals and Energy in terms of s11 of MDA
to cede and assign to the Grantor a 25% (TWENTY FIVE PERCENT)
undivided share in any prospecting right or mining right acquired or
to be acquired by De Beers, or for the approval of the
Director-General, Minerals and Energy, in terms of s20 MA to cede a
25% (TWENTY FIVE PERCENT) undivided share in the diamond rights to the
Grantor, and the provisions of these Heads will thereupon be
implemented by way of an unincorporated joint venture ("THE JV")
substantially on the same terms and conditions as would have applied
had a Cessionary Company or Cessionary Companies been formed and used
as the vehicle for the exploitation of such mineral rights in terms of
these Heads, and the further provisions of this clause 7 shall apply
mutatis mutandis to such JV.
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7.3 With effect from the date on which the Prospector decides to commence
with mine development in respect of the whole or any part or parts of
the properties (if applicable) and notwithstanding that the allotment
of shares (or a participation interest in the JV, as the case may be)
to the Grantor in terms of clause 7.1 or clause 7.2 has not yet
occurred, the Grantor will contribute by way of loan account its 25%
share of all capital and current expenditure incurred or to be
incurred by the relevant Cessionary Company in regard to the further
prospecting, development, mining and processing of or relating to
diamonds on the relevant properties, in response to cash calls by the
relevant Cessionary Company. Should the Grantor not contribute all or
any of a particular cash call, its shareholding in the relevant
Cessionary Company will be diluted pro rata in accordance with the
formula set out in annexure E. Effect will be given to such pro rata
dilution by the Cessionary Company issuing to the remaining
shareholders such further shares as will result in the Grantor holding
the relevant diluted shareholding. The Grantor hereby irrevocably and
in rem suam appoints the Cessionary Company, acting through any one or
more of its Directors, to effect such transfer. The aforegoing
provisions in this clause 7.3 will in similar fashion apply in regard
to any other shareholder in the relevant Cessionary Company which does
not contribute all or any of its contributions in response to a
particular cash call.
7.4 After issue of the shares to the Grantor in terms of clause 7.1 the
following provisions will apply.
7.4.1 The Grantor will be entitled to representation on the Board of
Directors of the relevant Cessionary Company equivalent to its
percentage shareholding in the Cessionary Company from time to
time (rounded down to the nearest number of whole number of
Directors) unless such shareholding falls below 10% in which case
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it will no longer be entitled to such representation. The
Chairperson of the Board of Directors will be a Director
appointed by De Beers and who will have a casting vote.
Resolutions of the Board of Directors will otherwise be by
majority vote. Management of the Company will vest in the Board
of Directors.
7.4.2 The Board of Directors will appoint a management committee which
reflects the same representation as does the Board of Directors
itself, to advise the Board on technical, financial and budgetary
matters and on the mining work programmes.
7.4.3 Notwithstanding anything to the contrary, the relevant Cessionary
Company will not be entitled without the written consent of the
Grantor if it holds not less than 10% (TEN PERCENT) of the
shareholding in the Cessionary Company, to dispose of the mining
right or mining rights held by the Cessionary Company.
7.5 No shareholder shall be entitled, directly or indirectly, to encumber
its shareholding in the Cessionary Company/ies ("the Hypothecation").:
7.5.1 in the event that such Hypothecation is created as security ("the
Security") in respect of a loan (for the purposes of and in
connection with the funding of the Cessionary Company by such
shareholder) from:
o any bank, as defined in the Banks Act, 1990 (Act No. 94 of
1990) (as amended) ("the Banks Act"); or
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o any other financial institution approved for that purpose by
the Registrar of Banks in terms of the Banks Act, on request
by the Minister in terms of Section 11(3)(b) of MDA,
unless and until the bank or financial institution in question shall
have undertaken in writing that any sale in execution or any other
disposal pursuant to the foreclosure of the Security will be subject
to the consent of the Minister and shall be subject to the provisions
of clause 7.6.
7.6 Notwithstanding any provisions to the contrary in the relevant
Cessionary Company's memorandum and/or articles of association from
time to time, and unless otherwise agreed in writing by the parties,
no party shall sell or otherwise dispose of or alienate or transfer
any of the shares held by it in the Cessionary Company save in
accordance with the provisions of this clause 7.6:
7.6.1 no Party shall be entitled to dispose in whatsoever manner of any
of its shares in the Cessionary Company unless it shall, in one
and the same transaction, dispose of a proportionate portion of
its claims on loan account against the Cessionary Company
(together, "THE SALE INTEREST");
7.6.2 subject to clause 7.6.1, in the event that a party ("THE SELLING
PARTY") intends disposing of any of its shares in the Cessionary
Company, the Selling Party shall deliver a written notice ("THE
SALE OFFER") to the other shareholder ("THE OFFEREE PARTY") to
that effect, offering to dispose of the Sale Interest for a
purchase price sounding in cash, in South African currency;
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7.6.3 the Offeree Party shall be entitled to accept the Sale Offer by
not later than 30 Business Days after the Sale Offer shall have
been delivered to the Offeree Party;
7.6.4 in the event that the Offeree Party is prevented from acquiring
the Sale Interest due to the stipulations of the Competition Act,
the Offeree Party shall be entitled, during such 30 day period,
to designate (by notice given to the Selling Party) a third party
which shall be entitled to exercise the Offeree Party's right to
acquire the Sale Interest by acceptance of the Sale Offer;
7.6.5 on the acceptance by the Offeree Party of the whole, and not a
part only, of the Sale Interest, the Selling Party shall, subject
to clause 7.6.9 and against payment of the purchase price in
respect of the Sale Interest, deliver the Sale Interest to the
Offeree Party;
7.6.6 in the event that the Offeree Party shall fail to accept the
whole (and not a portion only) of the Sale Offer during the 30
day period stipulated in clause 7.6.24, the Selling Party shall
be entitled, during a period of 60 business days thereafter, to
solicit an offer from a bona fide third party ("THE THIRD PARTY
OFFER") to purchase the Sale Interest;
7.6.7 in the event that the Selling Party is able to solicit a third
party offer the Selling Party shall deliver a written notice
("THE SALE OFFER") to the Offeree Party offering to dispose of
the Sale Interest upon the terms and conditions set out in the
third party offer in which event the Offeree Party shall be
entitled to accept the Sale Offer by not later than 30 Business
Days after the Sale Offer shall have been delivered to the
Offeree Party (to which clause 7.6.4 and clause 7.6.5 shall
mutatis mutandis apply);
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7.6.8 in the event that the Offeree Party does not accept the Sale
offer within the aforesaid period the Selling Party shall be
entitled to dispose of the Sale Interest but then only to the
third party referred to in clause 7.6.6 and upon the terms and
conditions set out in the Sale offer (provided that prior to
conclusion of such third party offer, the third party shall have
agreed in writing to bind itself as a party to this agreement (or
any subsequent written shareholders' agreement entered into
between the parties hereto) in the place and the stead of the
Selling Party), failing which this clause 7.6 will revive;
7.6.9 it is specifically recorded that Ministerial consent, in terms of
Section 11 of MDA, may be required in respect of the transfer by
the Selling Party of the Sale Interest to the Offeree Party. The
Selling Party and the Offeree Party shall co-operate in good
faith in making application for and taking all steps reasonably
necessary for and incidental to and/or concerning the granting by
the Minister of such Ministerial consent. In the event that the
Minister shall fail and/or refuse, for whatever reason, to grant
the Ministerial Consent in respect of the transfer of the Sale
Interest to the Offeree Party, ("THE AFFECTED OFFEREE PARTY"),
the Affected Offeree Party shall be entitled in consultation with
the Minister to identify a third party reasonably acceptable to
the other shareholders of the Cessionary Company and in respect
of whom the Minister shall be prepared to and shall grant the
Ministerial consent in respect of the transfer of the Sale
Interest to such third party, and the Affected Offeree Party
shall be entitled to cede and delegate its rights and obligations
arising in terms of this clause 7.6 to such third party, provided
that:
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o such third party shall, if it shall not already be a party
to this agreement (or any subsequent shareholders'
agreement), bind itself as a party thereto; and
o in the event that the Affected Offeree Party shall fail, by
not later than 60 Business Days after the Minister shall
have refused to grant the Ministerial consent in respect of
the transfer of the Sale Interest to the Affected Offeree
Party, to identify the third party described in this clause
7.6.9 and to procure the granting by the Minister of the
Ministerial consent in respect of the transfer of the Sale
Interest to such third party, the Affected Offeree Party
shall be deemed not to have accepted the Offer, whereupon
the provisions of clause 7.6.6 shall apply.
8. OPERATING CONTRACTORSHIP
The parties shall procure that, should the Prospector at any time be
someone other than De Beers, if so elected by De Beers in a written notice
to the Prospector prior to the latter entering into any contract to this
effect with a third party, De Beers shall be entitled to be appointed as
the contractor for the conduct of some or all of the operations arising
from these Heads of Agreement, including prospecting, mining, processing
and marketing, of the Prospector, upon terms and conditions to be agreed
between the Prospector and De Beers substantially in compliance with
generally accepted contracts of a similar nature in the international
mining industry.
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9. DIAMOND SALES
9.1 Subject to clause 9.2, all diamonds recovered either during mining by
the Prospector will be sold and delivered to a De Beers group
affiliated company nominated for this purpose by De Beers in
accordance with the diamonds sales provisions attached hereto as
annexure F hereto. If any diamonds recovered during prospecting are
sold then they too shall be subject to this provision.
9.2 The Grantor shall be entitled to receive 25% of the net proceeds
arising from and/or in connection with the sale of all diamonds
recovered during prospecting. The Prospector shall, upon written
request by the Grantor, provide the Prospector with extracts from the
statutory diamond registers of the Prospector insofar as they deal
with any diamonds recovered from the properties during prospecting (if
any) in order to keep it properly informed of the details of any
diamonds so recovered.
10. MISCELLANEOUS
10.1 The parties will support each other in implementing these Heads.
10.2 Notwithstanding anything to the contrary herein contained, the Grantor
may from time to time cede and assign to any other of its group
affiliated companies all or any of its rights and obligations in these
Heads of Agreement, as well as the shares and any loan accounts and
other claims that it may hold in any cessionary company from time to
time, provided that the Grantor procures that the cessionary company
will honour the obligations of the Grantor set out in this agreement
and that a written agreement between the Prospector, the Grantor and
the Cessionary Company is concluded to this effect.
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10.3 Save in terms of clauses 6.2 and 10.2 above, neither party shall be
entitled to cede, assign or sub-grant any rights or obligations in
terms of these Heads or, in the case of the Grantor, the mineral
rights themselves or any rights ancillary thereto, without the prior
written consent of the other party.
10.4 Subject to the provisions of clause 12 below, disputes will be
determined by arbitration in accordance with the rules of the
Arbitration Foundation of South Africa. The arbitration award will, in
the absence of manifest error and subject to statutory provisions to
the contrary, be final and binding on the parties and not be subject
to review or appeal.
10.5 The parties will procure that these Heads, the conclusion thereof, and
all information disclosed and/or obtained by either party pursuant
thereto will, subject to applicable statutory obligations, be kept
confidential.
10.6 No variation, amendment or consensual cancellation of these Heads will
be of any force or effect unless in writing signed by the duly
authorised representatives of the parties.
10.7 All amounts cited in these Heads are cited exclusively of value-added
tax which, where payable, shall be payable additionally thereto.
10.8 No indulgence which either of the parties ("THE GRANTOR") may grant to
the other ("THE GRANTEE") shall constitute a waiver of any of the
rights of the grantor, which shall not thereby be precluded from
exercising any rights against the grantee which might have arisen in
the past or which might arise in the future.
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10.9 References to writing or to written documents in these Heads
of Agreement completely exclude all forms of communication by
email or similar electronic means (other than facsimile).
11. PRESERVATION AGREEMENT
The considerations and participations provided for in these Heads will
continue to endure in favour of the party entitled thereto notwithstanding
that the old order rights constituted by the mineral rights or by these
Heads cease to exist in terms of MDA. The parties will sign a side letter
substantially in accordance with annexure G hereto to that effect.
12. COMPREHENSIVE AGREEMENT
These Heads are legally binding on the parties. Should any provisions
therein be too vague to be legally enforceable, such provisions will, in
the absence of mutual agreement between parties, be amplified by referral
to a tribunal of 3 persons ("THE EXPERTS"), consisting of one attorney
nominated by each party and an expert nominated, in the absence of mutual
agreement, by the President of the Chamber of Mines of South Africa or his
or her nominee, to avoid such vagueness and to render them enforceable.
Such tribunal will be obliged to receive oral or written representations by
the parties. Such tribunal will act as experts and not as arbitrators and
their award will, in the absence of manifest error and subject to statutory
provisions to the contrary, be final and binding on the parties and not be
subject to review or appeal. Any provisions which notwithstanding this are
void or unenforceable will be severable from the rest of these Heads. It is
nevertheless the intention that these Heads are to be replaced by a
comprehensive prospecting agreement to be concluded by the parties within
six months of the conclusion of these Heads and which will reflect the
intention of the parties as contained in these
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12/07/2004
Heads and all the terms and conditions usually found in a shareholders'
agreement or, in the case of the applicability of the proviso to clause
6.1, in a joint venture agreement relating to an unincorporated joint
venture. However, in the absence of such conclusion, these Heads will
remain binding on the parties.
13. DOMICILIUM AND ADDRESSES
The parties choose as their domicilium and as their addresses for purposes
of notices and payments in terms of these Heads, the following addresses :
13.1 the Grantor: 3rd Floor
28 Harrison Street
Johannesburg
P.O. Box 82291
SOUTHDALE
2135
13.2 the Prospector: De Beers House
cnr Amethyst Street and Crownwood Road
THETA
JOHANNESBURG
Private Bag X01
SOUTHDALE
2135.
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14. EXECUTION
These Heads are signed on behalf of :
14.1 the Grantor by H.C. Buitendag and G.T. Miller in their capacities as
Directors of the Grantor, duly authorised hereto by a resolution of
Directors of the Grantor;
14.2 the Prospector by W.F. McKechnie and G.A. Beevers in their capacities
as Directors of the Prospector, being duly authorised thereto by a
resolution of Directors of the Prospector.
SIGNED at JOHANNESBURG this 28th day of April 2004.
For and on behalf of the Grantor
/s/ H.C. Buitendag
-----------------------------------
DIRECTOR
/s/ G.T. Miller
-----------------------------------
DIRECTOR
SIGNED at JOHANNESBURG this 30th day of April 2004.
For and on behalf of the Prospector
/s/ W.F.McKechnie
-----------------------------------
DIRECTOR
/s/ G.A.Beevers
-----------------------------------
DIRECTOR
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LIST OF ANNEXURES
-----------------
A: LIST OF MINERAL RIGHTS, PROPERTIES, AND TITLE DEEDS
B: FORM OF WRITTEN CONSENT TO PROSPECT AND TO REMOVE AND DISPOSE OF MINERALS
FOUND DURING PROSPECTING
C: FORM OF CESSION AND ASSIGNMENT
D: MINIMUM WORK PROGRAMME
E: DILUTION FORMULA
F: DIAMOND SALES PROVISIONS
G: PRESERVATION LETTER
--------------------------------------------------------------------------------
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ANNEXURE A
LIST OF MINERAL RIGHTS, PROPERTIES, AND TITLE DEEDS (TO BE AMPLIFIED BY REC)
HT DISTRICT 3 FARMS
Rooikop 18HT
Maquasa 19HT
Roodekraal 21HT
IS DISTRICT 7 FARMS
Van Dyksdrift 19IS
Hartbeestfontein 39IS
Roodepoort 40IS
Vlakfontein 72IS
Driefontein 137IS
Vaalwater 173IS
Bloemfontein 196IS
IT DISTRICT 12 FARMS
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Steynsdraai 46IT
Zandvoort 10IT
Sunnyside 126IT
Craigielea 202IT
Usutu 250IT
Basel 313IT
Kiel 315IT
Driehoek 349IT
Prospectfarm 361IT
Nooitgezien 381IT
Stralsund 435IT
Breda 499IT
JS DISTRICT 19 FARMS
Aangewezen 129JS
Frischgewaagd 131JS
Dwars-In-De-Weg 137JS
Zaaiplaats 157JS
Booy Zyn Kraal 254JS
Klippoort 277JS
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Hartbeesspruit 281JS
Kalbasfontein 284JS
Driefontein 297JS
Doornpoort 312JS
Driefontein 338JS
Olifantslaagte 378JS
Rietvlei 397JS
Hartogshoop 410JS
Hartogs Hof 413JS
Klipfontein 470JS
Bothashoek 475JS
Woestalleen 478JS
Speculatie 483JS
JT DISTRICT 6 FARMS
Der Brochen 7JT
Diepgezet 18JT
Wanhoop 78JT
Witklip 83JT
Rietfontein 88JT
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Sterkstroom 118JT
JU DISTRICT 5 FARMS
Burgers Hall 21JU
Tenbosch 162JU
Lodwich's Lust 163JU
Coopersdal 423JU
Castilhopolis 425JU
KS DISTRICT 6 FARMS
Moeijelyk 412KS
Zwartkoppies 413KS
Schoonoord 462KS
Thornhill 544KS
Vooruitzicht 787KS
Klipspruit 835KS
KT DISTRICT 36 FARMS
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Lorraine 73KT
Schwerin 95KT
Wismar 96KT
De Paarl 97KT
Riverside 107KT
Penge 108KT
Waterkop 113KT
Onverwacht 135KT
Excellence 157KT
Bismarck 174KT
Enable 175KT
Bazaine 192KT
Sadowa 196KT
The Oaks 198KT
The Elms 199KT
Finale 200KT
Callais 226KT
Grovedale 239KT
Happyland 241KT
Welverdiend 243KT
Scotia 248KT
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De Kom 252KT
Rooiboklaagte 259KT
Pretoria 264KT
Valencienes 265KT
Gondor 266KT
Zwemkloof 283KT
Groot Vygenboom 284KT
Genokakop 285KT
Onverwacht 292KT
Winterveld 293KT
Doornbosch 294KT
Olifantspoortje 319KT
Houtbosch 323KT
Klipkloof 346KT
Buffelkloof 382KT
KU DISTRICT 6 FARMS
Okkernootboom 211KU
Acornhoek 212KU
Edinburgh 228KU
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Rolle 235KU
Allandale 237KU
Dumfries 245KU
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ANNEXURE B
WRITTEN CONSENT TO PROSPECT AND TO REMOVE AND DISPOSE OF
MINERALS FOUND DURING PROSPECTING
We,
RANDGOLD AND EXPLORATION COMPANY LIMITED
(No. 1992/05642/06)
("THE GRANTOR")
hereby grant to
DE BEERS CONSOLIDATED MINES LIMITED
(No. 1888/000007/06)
(together with its successors in title and assigns "THE PROSPECTOR")
the sole and exclusive right and consent to prospect for minerals (as defined in
the Minerals Act, 1991 and as held in terms of our titles listed on annexure
B(1) hereto) on the properties listed on annexure B(1) hereto pursuant to the
mineral rights listed on annexure B(1) hereto, and to remove and dispose of
minerals found during prospecting, all for the Prospector's own benefit and
account.
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DATED at JOHANNESBURG this _____ day of ________________ 2004 in the presence of
the undersigned witnesses :
AS WITNESSES :
------------
1. for and on behalf of the Grantor
------------------------
2.
------------------------ -------------------------
DIRECTOR
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ANNEXURE B(1)
LIST OF MINERAL RIGHTS, PROPERTIES AND TITLE DEEDS
((TO BE CREATED FOR EACH CONSENT))
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12/07/2004
ANNEXURE C
CESSION AND ASSIGNMENT
We,
DE BEERS CONSOLIDATED MINES LIMITED
(No. 1888/000007/06)
("THE CEDENT")
hereby in terms of clause 6.2 of the heads of agreement to which a draft of this
cession and assignment was an annexure, cede and assign our rights and
obligations in terms of such heads of agreement (excluding those in clauses 7.3,
8 and 9 which are personal to ourselves), to
_____________________ (PROPRIETARY) LIMITED
(No. _____/________________/07)
("THE CESSIONARY")
in respect of only those properties which are listed on annexure C(1) hereto,
subject to the terms and conditions of the heads of agreement and for no
consideration.
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12/07/2004
DATED at JOHANNESBURG this _____ day of ___________________ 2004 in the presence
of the undersigned witnesses :
AS WITNESSES :
------------
1. For and on behalf of the Cedent
------------------------
2.
------------------------ -------------------------
DIRECTOR
And we,
_______________ (PROPRIETARY) LIMITED
(No. __________/___________/07)
("THE CESSIONARY")
hereby accept the abovementioned cession and assignment subject to such terms
and conditions and for no consideration.
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12/07/2004
DATED at JOHANNESBURG this _____ day of _______________ 2004 in the presence of
the undersigned witnesses :
AS WITNESSES :
------------
1. For and on behalf of the Cessionary
------------------------
2.
------------------------ -------------------------
DIRECTOR
ANNEXURE C(1)
((LIST OF PROPERTIES TO BE COMPILED FOR EACH
CESSION AND ASSIGNMENT)
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12/07/2004
ANNEXURE D
SUMMARY PROSPECTING PROGRAMME FOR RANDGOLD AND
EXPLORATION COMPANY LTD MINERAL RIGHTS FARMS
This note defines the prospecting work planned for properties for which De
Beers is acquiring options on the mineral rights for precious stones held
by RandGold and Exploration Co Ltd (henceforce "the properties") during
2004/5 and beyond.
1) REVIEW WORK
This will determine the method of prospecting and amount of work required
on a farm by farm basis for the properties. This will include a review of
any historical data that might be available and a consideration of the
terrain and local geology. This should take approximately two weeks. Any
further work deemed necessary in terms of interpretation of remote sensing
data would continue in parallel to the fieldwork described below.
2) RECONNAISSANCE SAMPLING
All properties requiring sampling for kimberlitic indicator minerals will
be covered by either soil sampling at a density of approximately 1 sample
per square kilometre or stream sampling at an approximate density of 1
sample per 10 square kilometres, or a combination of both methods,
depending on the terrain. Sample parameters will be based on De Beers'
standard procedures, optimised for the areas concerned.
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3) FOLLOW-UP SAMPLING
Upon receipt of any positive results from reconnaissance work, additional
sampling may be required to confirm and better define such anomalies. This
work may begin as soon as results for particular properties become
available and should thus be completed within "Year 1" of the programme.
During Stages 2 and 3 prospecting permit applications will be submitted for
properties showing confirmed positive results. This process can take just a
few weeks per farm but can become quite lengthy if a detailed EMPR is
required.
4) GEOPHYSICAL FOLLOW-UP, DRILLING AND OTHER EXCAVATIONS
Once prospecting permits are issued, detailed geophysical surveys covering
the most interesting areas will be conducted. If early sample and/or
geophysical results are encouraging some percussion drilling and/or shallow
trenching/pitting may then be carried out. This could take up much of the
following 2 years, including obtaining results. At this stage no estimate
can be made of such work.
5) MINI-BULK SAMPLING
If any kimberlites of significant size are discovered, further drilling or
excavation will possibly be required to obtain initial bulk samples for
testing for the presence of macro diamonds (> 0.5 mm). This would take at
least another year, bringing the total to complete this programme between 4
and 5 years. Note that this would not constitute a full evaluation of any
kimberlites discovered, but merely a preliminary test of economic interest.
23 April 2004
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ANNEXURE E
DILUTION FORMULA
(P+F)x100
DPS= ------------
(X+Z)x1
in which formula :
DPS represents the diluted percentage shareholding of the Grantor;
p represents the aggregate amount in South African Rand of the contributions
actually paid by the Grantor to the relevant Cessionary Company prior to
the present cash call, for which purpose, in addition to any actual
contributions paid by the Grantor to the Cessionary Company, 25% of the
aggregate of all expenditure incurred by and/or contributions made by the
Prospector to the relevant Cessionary Company, reckoned with effect from
the Effective Date up to and including the date upon which a decision to
commence with mine development was taken by the Prospector, shall be deemed
to be a contribution paid by the Grantor to such Cessionary Company;
F represents the amount (if any) in South African Rand actually contributed
by the Grantor to the Cessionary Company in response to the present cash
call;
X represents the aggregate amount in South African Rand of all contributions
actually paid by the Grantor and the Prospector to the relevant Cessionary
Company prior to the present cash call plus the deemed contribution
referred to in P above;
Z represents the amount in South African Rand of the present cash call.
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ANNEXURE F
DIAMOND SALES PROVISIONS
1. All diamonds recovered from the properties at any time will be sold by the
Prospector to a De Beers Group affiliated company nominated for this
purpose by De Beers ("DE BEERS") only and will be marketed solely through
De Beers.
2. In the event that the De Beers Group affiliated company is the Diamond
Trading Company (Pty) Ltd ("DTC") all sales of diamonds will be in
accordance with the core principles of the DTC's standard selling
arrangements, which include:
2.1 Reciprocal commitments by the DTC and the Prospector exclusively to
buy and sell the Prospector's entire production at a price of 90%
(ninety percent) of the DTC's Standard Selling Value;
2.2 Quota arrangements whereby the Prospector will be entitled to deliver
diamonds to the DTC based on its quota percentage of annual DTC
diamond sales pro rata to the total annual intake of diamonds
available to the DTC from all sources;
2.3 An annual contribution by the Prospector to the advertising budget of
the DTC based on its quota percentage; and
2.4 A review of the terms and conditions of sales to the DTC every 5
(five) years.
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ANNEXURE G
PRESERVATION LETTER
--------------------------------------------------------------------------------
DE BEERS CONSOLIDATED MINES LIMITED
Randgold & Exploration Company Limited
Dear Sirs
HEADS OF AGREEMENT DATED _____ ____________________ 2004 BETWEEN US
We refer to the above heads of agreement and confirm that the considerations and
participations provided for in the heads of agreement will continue to enure in
favour of the party entitled thereto notwithstanding that the old order rights
constituted by the mineral rights mentioned therein or by the heads of agreement
themselves cease to exist in terms of the Mineral and Petroleum Resources
Development Act, 2002. Kindly confirm your acceptance of and agreement to this,
below.
Yours faithfully
DE BEERS CONSOLIDATED MINES LIMITED
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12/07/2004
We,
RANDGOLD & EXPLORATION COMPANY LIMITED
(No.1992/05642/06)
hereby confirm our acceptance of and agreement to the above.
Yours faithfully
RANDGOLD & EXPLORATION COMPANY LIMITED